Ending violent international conflicts requires understanding the causal factors that perpetuate them. In the Israeli–Palestinian conflict, Israelis and Palestinians each tend to see themselves as victims, engaging in violence only in response to attacks initiated by a fundamentally and implacably violent foe bent on their destruction. Econometric techniques allow us to empirically test the degree to which violence on each side occurs in response to aggression by the other side. Prior studies using these methods have argued that Israel reacts strongly to attacks by Palestinians, whereas Palestinian violence is random (i.e., not predicted by prior Israeli attacks). Here we replicate prior findings that Israeli killings of Palestinians increase after Palestinian killings of Israelis, but crucially show further that when nonlethal forms of violence are considered, and when a larger dataset is used, Palestinian violence also reveals a pattern of retaliation: (i) the firing of Palestinian rockets increases sharply after Israelis kill Palestinians, and (ii) the probability (although not the number) of killings of Israelis by Palestinians increases after killings of Palestinians by Israel. These findings suggest that Israeli military actions against Palestinians lead to escalation rather than incapacitation. Further, they refute the view that Palestinians are uncontingently violent, showing instead that a significant proportion of Palestinian violence occurs in response to Israeli behavior. Well-established cognitive biases may lead participants on each side of the conflict to underappreciate the degree to which the other side’s violence is retaliatory, and hence to systematically underestimate their own role in perpetuating the conflict.

KUALA LUMPUR (July 20, 2011): Wage increases in the country have been lagging behind rising prices of goods and services over the past few years, and this is fuelling a widening income disparity between the rich and poor, economists said.

And this high level of inequality is detrimental to future growth and if left unchecked, is a threat to the country’s aspiration to become a high-income nation.

“We have a negative income growth in a growing economy,” Institute of Strategic and International Studies (ISIS) senior analyst Muhammed Abdul Khalid said Wednesday in his presentation at a forum organised by Malaysia Rating Corp Bhd.

At the function, a book by MARC chief economist Nor Zahidi Alias, compiling his articles in the media, was also launched.

One reason often cited for this mismatch in salary increase and price hike is the oversupply of cheap labour in the country.

Muhammed said about 34% of the population earn less than RM700 a month. This means a third of the working population have an income below the official poverty line of RM720 a month.

According to Muhammed, the country’s gross domestic product (GDP) expanded at an average rate of 5.3% every year between 2000 and 2009. In the meantime, wages increased by 2.9%, which was slower than the annual inflation rate of 3.2%.

The government hoped to achieve a steady 6% annual growth and become a developed nation by 2020. A key target is to boost gross national income per capita (GNI) to US$15,000 from the current US$8,140 and qualify as a high-income nation.

This brings the question of whether the wealth is equally distributed.

Muhammed said a lot of the country’s wealth is concentrated in a small group of people, with 20% of the population owning 95% of the financial assets.

“The gap between the rural poor and urban rich is at its widest,” he said.

Muhammed also shared his view on the brain drain, which he said is a “normal thing” that is happening all over the world.

The concern for Malaysia, however, was that the outflow of talents was not being compensated by inflows, resulting in a shortage in certain professions.

“… This is a fresh and thought-provoking argument. But it is based on the assumption that Western financial institutions, and self-serving corporations, are the best possible model for development. Given the havoc that these institutions have caused in recent times, and the fact that injustice and obscene wealth is integral to their make-up, I think it is an assumption too far.

One also needs to consider why Islam insists on the egalitarian distribution of wealth and historically suppressed the emergence of monopoly capital. Perhaps it has something to do with a socially conscience vision of society that emphasises genuine equity and justice? Kuran’s thesis is contentious; but it does provide us with an incentive to reformulate Islamic law. It is an excellent starting-point for a debate long overdue.” Reviewed by Ziauddin Sardar

Timur Kuran is an avid reader of Islamic economic and legal history and an immensely well informed scholar. This latest work not only combines his earlier arguments but also provides some new perspectives.

The gist of Kuran’s arguments is the following (p. 281)
1. In its early centuries Islam developed a law of contracts that was sophisticated for the time.
2. This law allowed passive investors to shield their personal assets while … however, active partners carried full liability.
3. The death of a partner terminated the partnership automatically.
4. Due to the Islamic inheritance law and polygamy the numbers of heirs could be large.
5. The partnership termination rule, like the lack of entity shielding, discouraged the formation of large and long-lived partnerships. Successful businesses quickly disappeared and rarely survived the death of their founders.
6. The evolution from simple partnerships to the corporation never took place.
7. Thus several self-enforcing elements of Islamic law — contracts, inheritance system, marriage regulations — jointly contributed to the stagnation of the Middle East.

These, otherwise, persuasive arguments (items 2-6) have several weaknesses: First, they are theoretical and some of them are not correct. Take item 2: Active partners in a mudaraba partnership did not carry any pecuniary liability unless proven to have been negligent. Take item 3: In an inan partnership with three or more partners, the death of one of them did not lead to automatic termination of the partnership. So, if the partners wished their firms to have longevity, all they had to do was to establish an inan partnership with three colleagues. Take items 4 to 5: Polygamy and the Islamic law of inheritance certainly must have resulted in a large number of heirs. But primogeniture, much admired by Kuran, or primogeniture-like solutions, could be realized through hiba (inter vivos gifts) or establishing family waqfs. Kuran recognizes the latter but dismisses the waqfs for being too rigid. In doing this, he ignores the “ten conditions” of the Hanefite law, which provided considerable flexibility to the waqf managers, as well as the possibility that the founder of a waqf could always have written a flexible deed to start with, if he so wished. The fact that many waqfs have survived for centuries may indicate that, indeed, they had flexible structures. Without a thorough and comparative analysis of the foundation deeds of waqfs, these institutions should not be dismissed so offhandedly.

Item 6 brings me to the second weakness: Though essentially correct — the evolution from simple partnerships to the business corporation, indeed, did not take place until the late nineteenth century, this failure was probably caused not by any failure or rigidity of the Islamic law but by other factors far more important than those mentioned by Kuran. In a nutshell, these factors were the following: geography, price and profit controls, high rates of interest (twice the permitted rates of profit), property rights restrictions, widespread confiscations and sustained crowding-out effects, in short, primarily the Ottoman “proto-quasi socialism.”[1] The relative power of the state, ever since Roman times, was of particular importance. Kuran recognizes that the European corporation flourished when central authority weakened following the demise of the Roman Empire (p. 103) but fails to contrast this with the situation in the Middle East, where the opposite was taking place and the region was militarizing in response to the Crusades. This failure is all the more striking because, based upon Shatzmiller, Kuran does provide his readers with excellent data on this phenomenon (p. 69).

So far, I have merely showed that Islamic law did provide sufficient flexibility to overcome the difficulties mentioned by Kuran. Interestingly, he is aware of some of these flexibilities (p. 80) but dismisses them. The question, however, remains whether Muslims actually made use of these. Did they, for instance, use the inan partnership with three partners in order to ensure longevity for their firms? Or, did they practice inter vivos gifts in order to protect the family property/firm from fragmentation? Such questions can only be answered by extensive research among the surviving records of the Islamic court registers. Kuran has mobilized a group of professional historians and had thousands of such cases transcribed. The results have been published in ten volumes. Although he deserves to be applauded for this effort, it is strange that he has provided such scant evidence for his arguments. There is no doubt that future historians will use his data as well as many others from among the more than 10,000 volumes of Istanbul court registers to test further.
This brings me to the most important weakness of this work. Kuran has reached a sensational conclusion with theoretical arguments supported by scant evidence. He has not hesitated to advertise his conclusion even in the very title of his book. He is so convinced of this conclusion that although throughout the book his readings clearly point to other possible causes, he has dismissed them. Had he made these logical deductions, the title of his book might have been very different.

All in all, this is a most informative book, one which should be read, however, with a huge grain of salt due to its author’s commitment to discrediting Islamic law.

Pritchett (2000) convincingly argued that the notion that public investment spending is equal to capital accumulation is a heroic assumption in many developing countries as public investment is not inherently productive. All too often, inefficiency, waste, or corruption, distort the impact of public spending on capital accumulation. Examples abound of unfinished roads leading to nowhere, incomplete bridges and power generation projects, and other white-elephant projects. Private investment returns, in turn, are lowered by the lack of complementary public inputs. Not surprisingly, the much anticipated growth dividends fail to materialise.

.. there are countless ways to bribe “elegantly” and “legitimately”. In the following, … four most common scenarios down:

The First Scenario:

The corrupted official can sell a fake painting at any rigged gallery. After coordinating with the official, the briber will go to the designated gallery and buy it at the agreed price plus the commission of the gallery owner. All of the three parties know that the painting is fake, but eventually they are all benefited. This fake painting can be reused and it can go through another bribery circulation of other “elegant” buyers and sellers.

The Second Scenario:

The briber puts a real and expensive painting at the gallery. The gallery marks down the price as if it were a fake painting. The official buys it as if he has the greatest bargain on earth. Sooner or later, the official can resell it at the right place, at the right time, and at the right price.

The Third Scenario:

The briber visits the official and gives him/her a real or fake painting as a present. Three days later, a seemingly unrelated person knocks the door of the official and buys that particular painting at an unreasonably high price. This buyer is actually a trusted subordinate of the briber, and, by doing so, the whole process does not involve the gallery whose owner will certainly ask for a commission.

The Fourth Scenario:

There are rigged auction houses all over China and they become the most suitable places for elegant corruption. The briber, first of all, gets a fake painting either from a gallery or a fake painting factory. Then, s/he provides relevant document proof of scholars and experts to take care of the problem of authenticity. These scholars and experts are paid to confirm the authenticity of this fake painting. They falsify every historical detail, evidence of painting style and scientific verification of the materials used. The forged painting is then given to the official as a gift and is auctioned at a very high price. Eventually, there is always someone coming from nowhere who wins the bid. Again, the bidder is a trusted person of the briber. These auction houses get hush money before the whole corruption process is completed.